Economic Inequality is Getting Worse and It's Affecting Latin America: Oxfam

NEW YORK CITY - Since 2020, the gap between the world's wealthiest and the poor has been drastically increasing, according to a report published by Oxfam International, an anti-poverty group. The richest five men in the world have doubled their fortunes yet at the same time, almost five billion people globally have become poorer.

At the current rate, it would take 230 years to end poverty but the world's first trillionaire can exist in only 10, according to "Inequality Inc." Oxfam's, latest report. While none of the world's five wealthiest men are Latin American, the economic gap they've caused has greatly affected the region — Carlos Brown Solá, research director at Oxfam Mexico explains how.

The following interview has been edited and condensed for clarity.

What is the main message of the report and what connections does it have with Latin America?

The main message is that five of the world's wealthiest billionaires have doubled their fortunes over the last five years and it's closely related to the monopolistic power and the concentration or market power in their hands. It's not just about the amount of wealth they are amassing but also what they do with that wealth, how they get that wealth and how it works. There is a vicious cycle at the moment: they are amassing a lot of wealth, which gives them political power in order to switch the rules of the came, and in turn they get more privileges and to amount more of their earnings from their companies to themselves.

Four of the world's wealthiest people are American, how have they impacted countries in Latin America?

There are two main ways: through their companies and their political power, influence and relationship with Latin American governments. For example, Elon Musk recently came to Monterrey to announce that Tesla Inc.'s largest vehicle factory will be in Mexico. It's been said that one of the many factors that contributed to this decision was all the benefits Tesla Inc. was going to get from the Mexican state, from both federal and local authorities. Whether it's due to closeness to the US market or because of the previous NAFTA agreement, there are many reasons why these companies decide to invest in these countries. There are many rules in the relationship between the state in the economy, but billionaires switch them and play them in order to show that they are the ones that have power. They have a huge influence in Latin America, both directly and indirectly, by themselves or through their companies.

What are some of the consequences of billionaires having such close relationships with Latin American economies?

First, the population will depend a lot on the employment created by these decisions. There is a lot of low quality employment available for locals as companies usually hire engineers and other higher paying jobs from people from other parts of the world. There is no quota on local employment. Second, they usually don't pay taxes. Billionaires get exemptions for five, ten, 15 or 20 years on property tax, on VAT on income tax. States and local governments don't have enough money to counterweight all the damages — environmental, social and territorial — that are provoked. There is also the political power and influence billionaires have on the authorities in our countries. For example in Mexico, the president publishes when he meets with Bill Gates, Elon Musk etc. The population pays the price of this power imbalance with low quality employment opportunities, low revenues for local governments and environmental damages provoked in our territories.

Can you give an example of the close relationship of a billionaire with a Latin American country?

Right now, we have the discussion of nearshoring — many of the tax regulations concerning nearshoring and the investments coming are coming after the decision of many US companies to remove their factories from China and bring them to closer territory. I think the greatest example is Elon Musk and Samuel Garcia, the current governor of Nuevo Leon. They don't hide it, they've shown videos of Elon Musk in Monterey and the discussions they've had. The announcement for the new factory of Tesla Inc. was very obvious. It was quite clear the relationship between Elon Musk and the decisions that the Mexican authorities made — not just by getting the land, but with tax breaks.

How can Latin American countries reduce the inequality gap?

Part of reducing the cap is revitalizing the role of the state in our economy and realizing that this has happened historically, because we have allowed it to happen. It has been a political decision that the relationship between tycoons and the Mexican government works the way it is — it is the same throughout Central America, South America and the Caribbean. These countries must revitalize the role of the state and realize that all the decisions that favor tycoons are affecting the rest of the populations.

We need to put people, communities and nature at the center of public decisions — that is the way to really reshape the relationship between Latin American/Caribbean states and these multinational companies. We must show they have enough power to counterweight all the decisions being made. It's not like David and Goliath, it's a matter of really trying to rebalance the relationship between one and the other.

What do you want readers to take away from the report?

That there is a way out. This status quo that we are currently living in is a political decision, it's a matter of decisions. It's not just "we are living in these times" or "that's just the way the cookie crumbles." There is a way out and it starts by putting people, communities and nature at the center of our public decisions. It's time to start thinking of a more just and egalitarian future. We must realize that we are in this situation because of the decisions we have made over the last decades. However, there is a way out. It implies making different decisions and showing there is a way to counterweight the huge amount of political and economic power that the billionaires have amassed.